Chasing the Norm

Australian academic and blogger on politics, international relations, and culture

Month: March, 2009

The Open Society and its Enemies

Shorter John Pasquarelli: Libs should be non-professional racists.

Johns claim to fame is only as ‘a former member of the Liberal Party and of the One Nation Party’, but you have to wonder what the editors of The Australian were thinking publishing this piece as serious commentary. In various forms it:
– Credits B.A Santamaria with stopping communism in Australia
– Calls Petro Georgiou liberalism “mischief” that has no place in the Liberal Party
– Accuses the Liberals of being too close to the Greens
– Labels Howards 1988 call for reducing asian immigration ‘innocuous’
– Claims Hanson ‘merely’ sought equality for ‘Aborigines and other Australians’
– Argues the public voted one nation because of her ‘treatment’ at the hands of the liberal party
– Claims anonymous ‘ Indians, Filipinos, Asians and Aborigines’ supported Hanson (so therefore its not racism!)
– Attacks the idea of allowing in Sudanese migrants, whilst asserting unnamed evidence shows some claim to be Christian when actually Muslim
– And finally argues the Liberals can re-find their feet by ‘flying the flag on the continuing Aboriginal industry, immigration, refugees, Pacific Islander guest workers, multiculturalism, militant Muslims or ethnic crime’.

This is what passes as commentary from our leading conservative newspaper ? Really? At a time of major economic crisis, bashing immigration & pacific islander guest workers is raised as a sensible suggestion ?

Other than the suggestion for less young hacks (& ‘phone manners’) nothing advocated here will gain the Liberals more than a thousand votes nation wide if that. In fact, given John’s regular efforts to insert himself into the story (‘in the 1990s, I was having a cup of tea with Bob Santamaria’; In 1996 I came to fully appreciate the implications of Hansonism. I began to receive calls from Indians, Filipinos, Asians (mainly Chinese) and Aborigines; It didn’t take me long to realise that most of these people spoke good English, were Christians and the product of assimilation; When I questioned Abbott about the Sudanese, he said they were favoured because they were Christians. I reminded him that evidence was mounting that many Sudanese were Muslims posing as Christians; As I watched Turnbull being sliced and diced by Labor’s Tony Burke in parliament …. I wondered what ordinary Australians were thinking. My emails to Turnbull’s office asking him how he was going to sell Double Bay to “Joe Blow” remain unanswered‘), the Liberal Parties lack of good phone manners to this obnoxious man stands as the best point in their favor in the entire article.

Still, the piece serves as a useful reminder that Hanson was a Liberal Party member, and many like her still remain in the party. Howard, Costello, Turnbull and the party leadership clearly don’t hold such views, but they have yet to sever the link rhetorically. They have embraced an open economic system, increased migration significantly, and claim to be the party of individual freedom and liberty. And yet, it all rings hollow whilst the xenophobic, culturally insular fears of people like John Pasquarelli still remain a significant element of the parties world view. Arguing for a clear and unafraid open society ideal, both economic and socially would be a good way for Turnbull to truly show the Liberal party stands for something. And one, he as a man who embodies such ideals is well placed to present.

Of Corporations Political Clout

As the sheer size of Obama’s budget has dropped jaws (along with its noticeable lack of actual spending restraint), we should expect to see more pieces like this coming out (H/t Andrew Sullivan):

During the campaign, presumably thinking of his Silicon Valley supporters, Obama proposed eliminating capital-gains taxes on start-ups in order to offset some of the tax effects that I’ve highlighted. This idea was always make-believe. As I predicted last July, the president’s just-released budget has “delayed” the proposal until 2014. Translation: it isn’t going to happen. Like the college students who stayed up late to hear Obama’s campaign speeches only to find his first significant action to be a stimulus program that will transfer about $1 trillion from them to the Baby Boomers, Silicon Valley Obama supporters may find themselves in an uncomfortable environment. A government-dominated economic era may not be an auspicious one in which to start companies that threaten big, incumbent corporations with lots of political clout.

There’s certainly an argument to be made here if indeed Obama’s policies result in higher taxes, and more regulation, but I think that last line is not just wrong, but 180 degrees wrong. Big incumbent Corporations with lots of political clout, are at their most powerful precisely when the high priests of the market are in government, not when the big government spenders are.

Whilst it may seem initiative that those on the Center-left who are cautious about the market’s power may act to dampen a dynamic market, the record of the last two decades shows the reverse is true. Center-Right governments, such as those of George W. Bush or here in Australia John Howard, are because of their beliefs, politically invested in the success of the market, and in the success of the big companies. Not only may they draw their friends, political supporters (and even vice-presidents) from Big Corporates ranks, they know that their economic credentials are being measured by the press on how well these organisations do. As such, their every incentive is to maintain as much of the status quo of the market as possible.

Here in Australia, we saw the pro-free Market government of John Howard repeatedly act to protect favoured big corporations. It privatised, the maintained the monopoly of the nations telecom Telstra (affecting both the telephone and Internet Service Provider markets) It ignored consistent outrage over the state of the supermarket industry to maintain Coles and Woolworths duopoly, it protected the airline industry and Qantas in particular from overseas competition, in healthcare policy, the new government private insurance rebate funneled millions into the big established providers. Established big business did very well under these governments. The idea of competition: not so much.

Howard’s government was in favor of a market that was prosperous amongst corporations, rather than one that was competitive between corporations. Competition is actually a rather risky thing for governments who feel their popularity is tied to the well being of the market. Competition if working well should regularly send businesses under, and with them all the jobs of their employers. It should see prices shifting about, punishing some areas of the country, rewarding others regardless of who is in a marginal electorate seat. Howard & Bush may have talked endlessly about increasing competition, and tried to reduce regulations to help reward entrepreneurial behavior, but they were also closely tied to the fortunes of the Big Corporate end of town, and hence gave these corporations significant political clout. The prosperous status quo was rewarded, not the young up and comers who made waves.

In the US a similar story repeated itself, with big business being brought into the room to make policy under the Bush Administration. No clearer sign of the rejection of such cronyism could be seen than the Obama’s ban on Lobbyists taking positions in the new administration. Corporate America’s political clout has been seriously undercut with the new government, in part due to its Big Government tendencies, not the reverse as Manzi mistakenly claims.

For the Center-Left, who are less concerned about the well being of each individual business, competition is perhaps the redeeming light of the market. Big Corporations are instead of being favoured sons welcomed in under their opponents are seen as self-interested challenges for such governments (if not being outright politically hostile in the money they send to right wing parties campaigns or via business association lobbies) Whilst Center-left too are willing to act to protect certain brands and industries (such as cars or manafacturing) these are typically industry wide and tied more to sheer numbers of jobs, than protecting the identity of particular brands. As such the Keating Government was happy to push Optus to enable competition with Telstra (then telecom) and the Rudd government is looking to small ISP’s to roll out its broadband network).

Center-Right governments may be able to claim they create better environments for new start ups and entrepreneurs, but that market concern comes at a cost of a greater political tie to the well being of the Big Corporate sector, whose interest is in anything but new corporations. What passed for pro-market rhetoric from the Howard and Bush governments was largely advocacy for the status quo. None of this is a hard and fast rule, but if as a start up your big problem is too high regulation/tax then a center-right government might be better, but if your big problem is too big competitors with political leverage, then a center-left government would be a better bet.

The Art of Rhetoric

Like others before him, Marcus Tullius Cicero, the great Roman Orator divided the skills of Rhetoric into five pieces. Master these, and Rhetoric would be thy sword.
1. Invention: The excogitation of things true, or things similar to truth to render one’s cause plausible
2. Disposition: The arrangement in order of the things thus discovered
3. Elocution: the accommodation of suitable words to the invented things
4. Memory: The firm perception in the soul of things and words
5. Pronunciation: The moderating of the voice and body to suit the dignity of the things and words.

Cicero was a politician (famous as one who helped lead the cause against Julius Caesar’s increasing power within the Roman Republic), and a lawyer, so he clearly has no trouble with things “similar to truth to render one’s cause plausible”, aka spinning and hyperbole to make a political point. But I really have to wonder what he would think of the current Conservative effort, both here and across the channel to call the Governments of Rudd and Obama “Socialist”. And do it again and again and again and again and again

Despite this rhetorical onslaught both Rudd and Obama are sky high in the polls, including in assessing economic performance.

Now we might be charitable and say that conservatives are pursuing a slow-burn strategy to turn public perception from one of the governments spending to keep out of recession into one of the government just spending because it likes to. But given the obvious desperation you can hear in those leading such calls to bring down their political opponents as quickly as possible, I doubt it.

Instead we have here a case of a political movement choosing the wrong Rhetorical weapon. Whilst Socialism was a scorning attack for the Right during the 1980’s, todays voters simply don’t know or care what it is. I see this every year as I teach undergraduate Political theory, and have to spend entire lessons explaining what socialism is. They might know a bit about Communism (its like that Stalin guy right?), but Socialism is awash. So forget getting anyone aged under 30 to know about it.

For those 30-60, who should have enough time on this planet to have read a book or two, but too young to have experienced it first hand, the weapon seems if anything worse selected. For those at either end of the spectrum, the people who are either looking to the government to ensure they can afford health care for their kids, or for their aging partners, or are at times of income stress (in raising a family, or retiring onto a pension), then their current experience with government intervention is pretty positive. Even for those who’ve already raised a family and earned their way in life, right now as they see colleagues being fired, or wonder about their own job security, the belief that government can stabilise what they already have (without any real likelihood of tax raises – indeed both Obama and Rudd are cutting taxes) then old labels like ‘Socialism’ seem irrelevant. Not only does calling these government socialist not change the view voters have of Government, it is making the opposition look outdated or unfocused on the real problem.

And finally, those over 60 who’ve lived under real socialist governments, or saw the horror of Communism up close: Well they either already vote for you, or will always vote against you, or can’t remember where they put the tea bag, let alone what it was like in 1949 when Chifley tried to nationalise the banks….

In fact the only voters who would actually respond to the calls of ‘Socialism’ against the current Center-Left governments, are those already yelling it themselves at the TV and have been doing so since before the elections. The effort to tag the current Labor and Democrats governments as socialist fails both requirement 1 and 3 of Cicero’s five skills. It wont change votes, and largely serves only to isolate the opposition from the concerns of the vast majority of the population.

It’s not surprising having suffered such harrowing losses that these groups would reach for old and reliable tools for attack. The Labor Party under Kim Beazley did the same from 1996-2001 where it continued to yell “fairness” and wondered why the people kept voting in Howard. Surely the people couldn’t be against ‘fairness’ they asked themselves, never pausing to wonder what exactly Howard meant by his own rhetorical weapon ‘choice’ during an economic boom.

If conservatives, or even economic liberals who are opposed to the Rudd & Obama governments policies want to convince the public of their position, then they need to begin by actually looking at what is being offered, why these governments are pushing it, and fashion new ways of responding. Otherwise they too will go the way of the socialists into the receding distant memory of modern society.

Many hands make light work

Whilst everyone has been quick to lay the blame for the financial slippery-dip we are currently on, few have actual solutions. Or rather, their solutions are almost entirely ideological, and held well before the crisis started. On the right it’s old meme’s such as the Community Protection Act, and Government always and everywhere being the problem. On the left its the nature of greed and free market fundamentalism. Both have some point, but it doesn’t exactly help much, and neither have been able to turn their principles into clear policy prescriptions. This idea however strikes me as one of the best to thus far come along:

we need to rethink our entire philosophy of regulation. Instead of assigning oversight responsibility to a finite group of bureaucrats, we should enable every investor to act as a citizen-regulator. We should tap into the massive parallel processing power of people around the world by giving everyone the tools to track, analyze, and publicize financial machinations. The result would be a wave of decentralized innovation that can keep pace with Wall Street and allow the market to regulate itself—naturally punishing companies and investments that don’t measure up—more efficiently than the regulators ever could.

Typically I’m sceptical about the proclaimed power of the online world to revolutionize data organisation. Wikipedia is held up as the great example, but it’s founder Jimmy Wales did some tests and found that: “over 50% of all the edits are done by just .7% of the users … 524 people. … And in fact the most active 2%, which is 1400 people, have done 73.4% of all the edits”

The blogosphere is very good at disseminating information, or getting 100 people to investigate something, each bringing in a new fact, but this is often done in an ideological manner without much social benefit (ie the Pajama Media’s efforts against Dan Rather in 2004) or is outclassed by the efforts of a few professionals (see the uncovering of the Windschuttle Hoax). Likewise the SETI and Folding @ Home programs havn’t really taken off as their founders would like; most computers idle downtime is still wasted.
But, as Clay Shirky argues, this is just the beginning, and the norm of such group uses of technology is still being socialized amongst the wider community (Shirky argues we will reach that point once it shifts from being new to ‘boring’ in how we view such roles). Equally the theory seems to make sense, and if there is an incentive (and every single stock market investor would have one) then the potential is immense. Even helping reduce some of the delays and costs of some of the current system could be a boon:

A Senate study in 2002 found that the SEC had managed to fully review just 16 percent of the nearly 15,000 annual reports that companies submitted in the previous fiscal year; the recently disgraced Enron hadn’t been reviewed in a decade..A few years ago, when banking regulators started requiring filings in XBRL [a set of tags that standardizes financial information] from its member banks, it found that the time it took auditors to review a bank’s quarterly financial information dropped from about 70 days to two. More regulators are catching on: Last December, the SEC announced that by June, every company with a market capitalization over $5 billion will be required to submit all filings using the format. And all publicly traded companies and mutual funds must follow suit by 2011.

It wont replace the need for the government regulatory bodies, but it could help us reduce their role to one of looking after the major & difficult players (those too big to fail/with a bad history) and leave the rest to be poked into by the public at large. In each and every theory of markets, the flow of accurate information is considered the essential requirement for efficiency to occur. This seems one great way to help move towards that goal.

And theory aside, this also seems to me to highlight one group who’ve thus far escaped blame in the financial crisis : Shareholders. Government has had to step in to help protect such people, and yet they were engaged in the market on the basis of self-interest, yet their willingness to ignore executive compensations, and the short-term focus and risky actions of many of these companies represents a failure of a role society needs such people to undertake, and is the least that could be expected of them, in return for the financial return they receive (indeed any who fail to, ought fail to make money under a real efficient market theory).